When an independent auditor recently examined the finances of the city of Box Elder, the firm found far more than the typical missing receipt or department that needed better oversight.

Rather, the auditor found a financial system nearly in complete disarray. Not only is the city operating at a general fund deficit of up to $500,000, it has poor bookkeeping, improperly intermingles city funds, does not have staff trained to adequately handle a budget and is violating state law by not drafting an annual spending plan or filing a required annual financial review for four years in a row, the audit said.

And yet, the financial mismanagement is only one of the issues facing Box Elder, a city of about 8,000 people located east of Rapid City that is the home of Ellsworth Air Force Base.

A Journal review of the audit and internal city documents, as well as interviews with top officials, shows that much is amiss in Box Elder, a situation made worse by a pattern of poor leadership and an unwillingness for anyone in authority to accept accountability for the ongoing issues.

So, as Box Elder residents cast ballots Tuesday for two city council seats, they’ll have plenty to consider.

The Journal review has found that:

• The city took on large projects like building a wastewater treatment plant and a new City Hall without a plan to pay for them.

• The city has a long track record of financial mismanagement, so much so that there may not be money to pay for basic city services when a sewer plant comes online in 2014.

• The architect who designed the new combined government building has warned that the construction was faulty and that employee safety may be compromised. When the issues arose, the architect said in a letter that former Mayor Al Dial, who oversaw the construction of the building, would not respond.

• The former police chief was allowed to quietly resign and look for new jobs as chief despite numerous complaints of harassment or improper behavior in Box Elder and at his previous two agencies.

• Allegations of harassment have been filed against incumbent Mayor Bill Griffiths, who was recently asked by two council members to resign.

• Public meetings have become mired in drama, including last week when Dial pulled out a video camera to tape responses Griffiths gave during the meeting.

Here is a deeper look at some of the issues facing Box Elder.

Accounting problems

In his first state-of-the-city address last week, Griffiths publicly announced some of the grim news about Box Elder’s financial burdens. Standing before half a dozen residents in the city’s senior center, Griffiths said that for at least the past five years, the city has used money from two city funds — the water fund and the sewer fund — to cover losses in the general fund. The general fund pays for things like police, streets, libraries and parks.

During that time, the general fund has been operating at a loss of between $350,000 and $500,000, according to Griffiths and audit reports. The problem is this: When the new sewer facility comes online in the spring of 2014, the city will have to spend $90,000 per month from its sewer fund to pay for its construction and maintenance of the facility. That means the sewer fund will no longer be able to cover those losses.

An audit released in February showed the extent of the city’s financial troubles going back to the years 2009 and 2010.

The audit, conducted by Casey Peterson & Associates, Ltd., reveals that the city of Box Elder made numerous accounting errors.

Among them: The city does not charge sufficient fees to cover its water service, resulting in deficits in that government fund; does not have reserve accounts as required under one debt agreement; does not reconcile its accounts in a timely manner or review them properly; improperly intermingles city funds; lacks adequate controls to monitor loans; city staff lacks a necessary understanding in accounting.

The audit also said the Box Elder City Council does not draft a budget on a yearly basis as required by state law.

“The errors are related to a lack of reconciliation of accounting records … and a lack of oversight of the accounting function of the city,” according to the report.

Implications

Neither Griffiths nor former Mayor Al Dial — who is running for a city council seat in Tuesday’s election — seem to accept the severity of the city’s financial troubles.

Griffiths told the Journal that the city has still not separated its different operating funds and attributed the problem to a "lack of sales tax revenues." At the state of the city address, Griffiths said his solution to make up the $500,000 annual general fund deficit would be to lure more businesses to Box Elder. He also proposed an ordinance to create a reserve account to designate money that would pay for the sewer facility.

Griffiths' stated plan: lure businesses such as Taco Johns, KFC, McDonald’s and other restaurants to Box Elder. Griffiths said the city has talked to each of those companies and that drawing them to Box Elder would mean more sales-tax revenue.

But in order to raise that much money, the city would need to earn more than 50 percent of what it currently receives in sales taxes. In 2010, the city earned $811,105 in sales and use taxes, according to the audit.

When asked about the audit, Dial suggested the problems were merely a matter of not having expenses and revenue properly coded when they are recorded.

When asked whether he was familiar with the audit, Council President Mark Coatney said he had not yet fully read it.

All told, the new sewer plant and the combined city building that opened last year will cost the city $1.25 million annually in the coming years, according to Griffiths.

Reporting delays

Not only are the city of Box Elder’s finances flawed, sometimes they aren’t reported at all, according to the state Department of Legislative Audit.

South Dakota cities are supposed to file annual financial reports with the state. But Box Elder did not provide any reports between 2008 and 2012, according to Marty Guindon, auditor general with the department.

“Not having submitted for five years is uncommon,” Guindon said. The state sends letters notifying Box Elder when it passes its due date each year, Guindon added.

The city has also been slow to conduct full financial audits, which it can perform either annually or every other year. Audits are performed by an independent accounting firm and serve to double-check a city’s math and to make sure it is following all the laws.

The audit for 2011 and 2012 is being completed and will be sent to the state in June, according to Griffiths.

Grant woes

Accounting problems and reporting delays are not the only troubles the city of Box Elder has had with tracking money. It took the city an extra year to get reimbursed $40,000 in federal grant money because it couldn’t show how it had spent the money.

Randy Kittle, a grants coordinator with the state Division of Parks and Recreation, mailed out a copy of the reimbursement form to the city finance director in August 2011, according to documents obtained by the Journal.

Nearly eight months later — after numerous calls and emails from Kittle, according to the documents — the city responded. But the records it sent in May 2012 did not properly document how staff time and city equipment was spent on the project, according to the documents.

Even when he was given more detailed records in August, “The invoices for materials appear to be of general city use with handwritten notes being made on some of the invoices [like] ‘shop’ and 'H20’,” according to a record of correspondence by Kittle to Griffiths that was obtained by the Journal.

The requirements weren’t worked through until the end of the year. Kittle told the Journal the grant money was sent in December. When asked whether a problem like this was common among cities receiving grants, Kittle said it was not.

Building issues

Even the city’s multi-purpose building, a fresh-looking government edifice situated east of Ellsworth Air Force Base, has endured scrutiny.

The building — which houses the police department, city government offices and an event center — is intended to anchor a yet-to-exist downtown. But it has come under criticism from the architecture firm that designed it, according to documents obtained by the Journal. A letter to Griffiths last June from the ARC International asserts that the building contains numerous code violations. The letter, which takes aim at construction materials obtained by the city for the project, cites several problems.

For starters, it says the police department main entrance is “equipped with substandard hardware that jeopardizes life safety egress during panic conditions.” Also, the “owner-provided doors have low quality hardware that would not be recommended for a commercial” building. The owner-provided windows also are not insulated and the city will “experience energy loss.”

Because the standards do not meet the architect’s standards, “the existing construction does not meet state statute which requires public buildings to be designed under the responsibility of a licensed architect,” the letter continues.

“I spent many hours over several months attempting to convince [former Mayor Al Dial] that these concerns be addressed,” wrote Donovan Broberg of Architecture International. ”I exhausted all options appropriate to my profession during the course of construction … all to no avail.”

Dial — the city’s mayor for most of the project’s conception, and who was paid $5,000 to manage the project after he left office — said that the city had a phone conference with International Code Council officials who agreed that the issues were not code violations.

“This has been gone over 15 times,” Dial said.

Griffiths, who said he has not taken any action to address the concerns, said they do concern him. After his state of the city speech, Griffiths fished out of his pocket a pair of keys with no teeth that had stenciled on them what looked to be a company name, “Mingbang.”

“The keys are really weird, and we can’t get no keys because the company went out of business,” Griffiths said. “So we don’t have keys for all the doors.”

Harassment allegations

When he was sworn in as mayor last May, Griffiths took some bold actions, like relieving Police Chief Timothy Ryan and Finance Officer Debbie Knapp of their positions. When Council President Mark Coatney asked Griffiths in February to resign, he cited a lack of consultation on those personnel decisions as one reason he wanted to see Griffiths gone. But allegations of personal misconduct against Griffiths were reportedly made around that time too, according to one council member.

The allegations were addressed in a Feb. 5 council meeting in executive session, after which Griffiths was asked to resign, said Council Vice President Terry Wenrick. Then, in a March 19 executive session, the city council discussed an investigator’s findings on the two complaints of harassment, according to Wenrick. One of those complaints was related to possible sexual harassment, he said.

Wenrick declined to name the employees involved or give specifics, but he said city employee working conditions have not been good in Box Elder.

“If they could afford not to work here, they’d be quitting,” Wenrick said of city employees.

The Journal last Wednesday requested an audio transcript of the meeting where the findings were reportedly delivered at the end of the night. The city of Box Elder, however, has not yet handed over the transcripts. Griffiths declined to comment on the allegations, adding, “There’s nothing on harassment.”

Another council member, Steven Cowley, said the issues are being resolved.

“It's troubling to have any complaint, but I think the items are being worked through. … It happened and we're moving forward,” said Cowley, who is up for election Tuesday for his first full term.

Tension at meeting

At the council’s April 2 meeting, Wenrick came out swinging. The councilman demanded that a council statement made after the March 19 executive session regarding the harassment allegations against Griffiths be printed in the public minutes. Those decisions, Wenrick said later, were the results of an investigation into the harassment complaints. 

Wenrick sounded openly hostile when speaking to Griffiths and rolled his eyes whenever the mayor spoke.

Dial sat in the audience and would comment on the discussion, frequently to disagree with the mayor or clarify a discussion topic. Sometimes Griffiths would even call on Dial to help answer a question about a past issue, like city fees for records requests. Toward the end of the meeting — before Wenrick confronted Griffiths on whether he passed documents to the Journal regarding the departure of former chief Ryan — Dial set a small video recorder on the bench to catch Griffith’s response. Griffiths denied that he gave the paper the documents.

Al LaBine sat in the meeting, too. The former councilman, who is running for a seat in Tuesday’s election, commended the Box Elder Police Department for helping a lady get in her locked car. LaBine told the Journal he is unaware of the financial difficulties facing the city. But he notices the “the tension” aimed at Griffiths by some council members and said he doesn’t know what’s going on behind closed doors.

Said LaBine: "There's only so much that gets spoke of at the city meetings.”

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(39) comments

bjozzy
bjozzy

As for embezzlement and missing funds I think the candy bowl girls in the office have access to the money and cities computers. Which everyone doesn't. As for people with no experience I think with all the problems going on that's the last thing you would want is somebody with no experience trying to fix it. No on the job training. Experience counts.

MW Racing
MW Racing

I think Box Elder needs to fire all City Council members and City Hall employees and start fresh. I like Griffith and think we could accomplish so much more having competent people working there. If you read the article many of the above were under Al Dial's watch and he did nothing. How are we going to pay for all this stuff Dial and his clan did? There hasn't been a budget in years, nothing submitted to the state. The article above states they employees are incompetent. I knew in 2008 when I bought my house an had tried to get information from city hall they had no idea what they were doing.

Outsidersview
Outsidersview

There was a budget submitted every year Mr. Dial was in office, just shows that some people do not do their investigating prior to posting things they really don't have any facts!!

sherwin
sherwin

What I meant was how do you say Griffins has no experience and is over his head? When the city council president wasnt elected to that post by the people or any other post other then trailer park manager. Wheres his experience??

Gunny605
Gunny605

I'm sure if you ask him he will be the first to tell you he has no experience. He was elected by the new council so you should ask them, not complain about Mr. Coatney. As far as I'm concerned he is doing pretty descent for being a first term councilman and getting thrown right into council president.

Gunny605
Gunny605

What annoys me most about going to council meetings is how Councilman Foster looks more like he is about to go to the gym than a council meeting, and how he asks questions about topics no one on the council or the current audience can answer because it has nothing to do with the city council meeting.

sherwin
sherwin

as who for the audit how long does it take to read it a lot of talk for someone who didn't received 1 vote for there position

Gunny605
Gunny605

What?

Outsidersview
Outsidersview

I would like to know where all the concerned citizens are when the council meetings are being held. Why is it that it's only during election time that all the folks with their comments start showing up? If you actually cared about your community, you would attend the council meetings and other city functions. The comments posted here are most likely from people who don't have a clue what the actual facts are surrounding these topics. Mr. Dial and the Council members under him accomplished many projects to improve the safety and well-being for the citizens of Box Elder. A little history: Other administrations attempted to build a city hall for several years prior to Mr. Dial, unsuccessfully I might add. City Hall was originally designed to be much smaller and more conservative. Due to "public" input it was redesigned to its current state. Not only did you get a city hall, but a business incubator, a badly needed Police building, and storm shelter for citizens of Box Elder. Before this building there was no shelter for anyone in this city. I don't believe you have any room to complain about the building as it stands if you can't be at any of the meetings to voice your opinion, Why do it now , it just shows your ignorance? Another project was Radar Hill Road - which was a severe safety hazard for anyone to travel. This is now a safe road. As for the filling of annual audits- it's a little difficult to balance your accounts (that were 3 years behind when Mr. Dial took office) without any documentation to back it up with. Mr. Dial set up a schedule to have the audits up to date by 2013. When our current mayor took over, the most difficult work concerning the audits had been completed and all he had to do is pick up where the previous administration left off. Its not so hard to do audits when you have a paper trail showing where everything went. As for our current mayor, when you lie to get elected and then claim you didn't have proper information after the fact,(I will lower sewer rates--on the flyer he handed out right before the election), you don't deserve to hold the Mayor's office. Mr. Griffiths was the one who made the motion to set the sewer rates, initially!! Also, the council members, newly elected and appointed, backing a man who is found guilty of misconduct to city employes, sure doesn't seem to have the best interest of the city in mind. The current mayor has been ordered to undergo a psych eval and counseling because of "misconduct." Why was it that when the official minutes were edited this information was left out? I would ask, where are all the comment makers during the city council meetings?

Black Hawk
Black Hawk

There are several reason why I purchase the RC Journal. Summerset and Box Town are two of them. Better than the funny pages!

gpneuf
gpneuf

I think the councilman should disclose he is a councilman when he posts. Sounds like sour grapes to me.

btdtgs
btdtgs

His name is in the article several times and, unlike the rest of us, he has the guts to post his comments under his own name, not some fictious screen name so nobody knows who we are.

TellItLikeItIs
TellItLikeItIs

yes it is however Terry Wenrich did not identify himself as a council member when making comments here now did he?

Outsidersview
Outsidersview

If you concerned citizens actually got involved you wouldn't need anyone to tell you he is a council member---you would know by his name that he is!

Gunny605
Gunny605

If you can't tell who he is by reading the article, then you have more problems to worry about than Box Elder politics.

Clifford
Clifford

Interesting. All but one of the problem areas were from before Mayor Griffiths took office. Takes more than a single year to right the apple cart. There are two factions at work in Box Elder ... the current administration and the previous administration along with their respective supporters. Until they learn to work together, nothing will change.

btdtgs
btdtgs

Griffiths was on council for seven years before becoming mayor. He very seldom voted no on anything before council, and many of the things he complains about under Mr Dials time as mayor, he made the motion to approve. He just Doesn't like Dial and his telling lies, only releasing part of the info on things to make Dial look bad before the election.

Gunny605
Gunny605

Actually the problems started before Mr. Dial took office. He is just taking the blame for the prior mayor's like Haddenham.

ToBeHeard
ToBeHeard

It seemed that city hall, under Mayor Dial, was always cutting corners. Who ever heard of USED tires on a police vehicle?? That's terrible. Police officers who swore to serve and protect were not being protected by city hall and subjected to unsafe vehicles then and now an unsafe office building. Pitiful. This city needs to definitely move forward under a competant leadership team. I think the best route is indeed a strong city manager, weak mayor type of government. There's no way to pay 1.25 million in bills with $800k in revenue. The city needs a new game plan.

Cinderella911
Cinderella911

Agreed!

btdtgs
btdtgs

The building is not unsafe. The general contractor on the project had so many issues with the architect they said they would never use him again.

Huskyrun
Huskyrun

Plenty of blame to go around. Current mayor, former mayor, current council, and past councils. I agree they should do away with the mayor position and hire a city manager. Probably not a bad idea to throw out the city council and elect new. The people who have tried to lead this little eyesore for the past few years need to go.

Pat Parent
Pat Parent

As a Box Elder resident of over 25 years, it's extremely disheartening to read of the current mess our city is in. However, I believe most of this is a result of inept leadership and a lack of transparency in our local government. I agree with a previous poster who suggested we get rid of the whole lot of past and present mayors and board members and start over.

notstupid
notstupid

This Haddenham running you never see her. Johnny fellow got her signatures and now two little boys running around delivering her flyers. She was old mayor before Mr. Dial didn't she give herself a raise and turn some woman's water off. I think she was in prison before and was she pardoned i saw that on-line? Well Mr. Dial came over himself and I had nice 2 hour question and answers with him. I asked him about audits, budgets, and other comments in paper and the windows at city hall he told me It was important for our city to have an established storm shelter for city disasters floods, tornadoes etc... The city has never had a place for people to go in a crisis before now we do and event center was to be equipped to feed and house many people and for security for city hall. The city hall committee selected the windows and decided a storm window could be added later if needed for efficiency. He told me windows were a great savings because who they were intended for the windows were measured wrong and we could buy them at 10% of their cost. Sounds like Mr. Dial wants to save taxpayer money not spend it frivolously. He has my vote. He is very smart man and cleared up my questions from the paper. I encourage other people to call the man he is very informative. His number is on his flyers, and he told me he has breakfast at the 4U every morning with his mom, dad and granddaughter if I had any more concerns.

Cinderella911
Cinderella911

hook, line, and sinker

Terry Wenrick
Terry Wenrick

Also pretty hypocritical of him to get rid of Chief Ryan without an investigation, and now he has the same issues, but won’t resign. Bottom line is today’s article and last Sunday’s article, along with the State of the City speeches is nothing more than an attempt by Mayor Griffiths to affect the outcome of Tuesday’s city elections by not giving out all the information.

TellItLikeItIs
TellItLikeItIs

By the way, what have you done for your ward? Except reveal executive session discussions that are meant to remain private.

Gunny605
Gunny605

What have you done for your ward, TellItLikeItIs? If you don't go to the Council Meetings and tell them what you want you can't complain.

Terry Wenrick
Terry Wenrick

At budget hearings last summer, Mayor Griffiths gave the council a letter that stated among other things, that he intended to return the $3000.00 that he was paid for the benches that were put in the council chambers. The last time I checked with the Finance Officer (Feb), he had not returned any of the money. When Mayor Dial left office there was a plan for paying for city hall and the waste water treatment plant. When Mayor Griffiths decided not to re-appoint Chief Ryan last year and citizens started questioning why, he stated that he had no intention of not re-appointing him until he got to the council meeting that night. But after he got there he was “handed all of these complaints, including some from women.” I was really impressed with the way he had a termination letter typed up, two people from the sheriff’s office standing by to escort Chief Ryan out, and Sgt Misselt ready to be sworn in as interim chief after arriving at the meeting.

Terry Wenrick
Terry Wenrick

When Al Dial took office as mayor in 2006, the city was years behind on audits because our financial records were so bad that no one would do the audits. He got Ketel Thorstenson to start work on getting our audits caught up. The city council (of which Bill Griffiths was a member) set a schedule for how many audits per year we would have done to get caught up, and that schedule is still being followed. Those early audits were not good. One problem was lack of segregation of duties, so city staff worked with the auditor to make sure that duties were segregated as much as possible with the limited staff we had. The audits for 2003, 2004 and 2005 all had major findings. Starting with the 2006 audit, the reports have been improving and I expect the 2011 audit to be better than the one for 2009 and 2010. Carolyn Haddenham was mayor from May 2004 to May 2006, Al Dial was mayor from May 2006 to May 2012. Mayor Dial kept the council informed and made no major purchases without prior council approval. Mayor Griffiths tries to keep information from the council.

TellItLikeItIs
TellItLikeItIs

its funny how things really start to come out during elections. I don't understand why Dial thinks he should be allowed to run for any office here or anywhere for that matter. He is the one that seems to to have created the money mess in the first place. I would like to know why "hurricane force windows" were even considered for city hall. I don't remember south Dakota being in a hurricane area.

Gunny605
Gunny605

I agree, funny like Mayor Griffiths being told he has to have a psychological examination while holding "State of the City" addresses?

ReallyBE
ReallyBE

Budgets were done in the past with former mayor DIAL, I sat every year at the meetings and sometimes 2 to 3 nights. HOWEVER, mayor Griffiths didn't even stay for the meeting. LEFT THE MEETING. Even worse Councilman Foster wasn't even there. Oh, and they took 30minutes to approve what mayor Griffiths set forth. Griffiths being a former council member and being part of setting previous budgets knew that he was suppose to start setting aside reserves for sewer treatment plant in 2013 AS PLANNED. He and new council DID NOT!! Oh, and Griffiths when running for election stating he would LOWER water and sewer rates, which he knew he could not do. Griffiths continuously misleads the public. Now journal pointing finger at past administration, REALLY?

concerned citizen of sd
concerned citizen of sd

The building of the government center is not the only thing that cut corners. Most of the new housing in Box Elder is sub par but nobody cares because it is all about politics and money. I think the whole Box Elder management, past and present, needs to be fined and fired. Start with fresh new faces that really do know what they are doing. It seems like too many kick backs are taking place and who has to pay for it, the citizens of Box Elder. As for pulling in more business, it;s not going to happen. I think that Box Elder should just go away and become part of Rapid City. Maybe this would solve some of the problems.

Dogwoman
Dogwoman

As a citizen of Rapid City- Thanks, but no-thanks. I don't see why the citizens of Rapid City should have to pay for it.

Revelation
Revelation

It sounds like quite a few corners were cut on the building of the new city hall. Where did the money go if it was supposed to go toward construction? If most of this article is accurate, Box Elder should likely consider changing its form of government and hire a City Manager. They also should be working on the City's budget for 2014 right now and work toward balancing it. Transparency sounds like an issue as well. There are no minutes on their website, no budget, basically, very limited information.

TellItLikeItIs
TellItLikeItIs

I think that you have a great idea as far as the City Manager. The town of Box Elder was founded on truth but it seems to have gone crazy in the last 8 years. The town of Box Elder originally had a City Manager instead of a Mayor. Maybe the people of Box Elder need to stand up to all of these people and tell them we are done with their bull and kick them all out.

btdtgs
btdtgs

Wow - looks like I got it right 2 months ago about why they asked for Griffiths resignation.

Box Elder....

Putting the "fun" in dysfunction again......

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